The landscape of the U.S. job market has shifted significantly in recent times, moving from a period of high turnover to one characterized by stability and low churn. The phenomenon known as the “great resignation” of 2021 and 2022 has now transitioned into what experts are calling the “great stay,” where hiring, quits, and layoffs are at minimal levels.
According to Julia Pollak, the chief economist at ZipRecruiter, the turbulent labor market of the pandemic era is now fading into the background. Initially, as the U.S. economy reopened post-Covid restrictions, there was a surge in job openings, record-low unemployment rates, and significant wage growth as businesses competed for talent. However, the job market has since cooled off.
In 2022, more than 50 million workers quit their jobs, setting a new record. This mass exodus was fueled by better job opportunities elsewhere. Despite this initial upheaval, the labor market has stabilized since then.
The quits rate, which peaked in 2022, has now returned to pre-pandemic levels. Hiring has slowed down significantly, reaching its lowest rate since 2013, excluding the early days of the pandemic. On the flip side, layoffs remain low by historical standards. This trend indicates that employers are holding onto their workforce, while employees are opting to stay in their current roles.
One of the primary drivers behind the “great stay” phenomenon is what economists refer to as employer “scarring.” Businesses, having faced challenges in hiring and retaining workers previously, are now hesitant to lay off employees. Additionally, the decline in job openings has led to a decrease in quits, as workers are less confident about finding new opportunities.
Another contributing factor to the current job market landscape is the U.S. Federal Reserve’s efforts to combat inflation by raising interest rates. This move made borrowing more expensive for businesses, prompting them to scale back on hiring and expansion. Although the Fed has started cutting interest rates, the pace of reduction is expected to be slower than initially projected.
Overall, the job market is showing signs of stabilization, shaped by the experiences of recent economic shocks. While those with jobs can enjoy unprecedented job security, individuals seeking employment, such as recent college graduates or dissatisfied workers, may face challenges in finding suitable opportunities. To navigate this competitive job market, experts suggest widening the job search and acquiring new skills to enhance employability.
In conclusion, the shift from the “great resignation” to the “great stay” signifies a more stable but competitive job market, where adaptability and resilience are key to success.
